ANILKUMAR HARISHANKAR PANDEY,SURAT vs. INCOME TAX OFFICER, WARD - 2(3)(1), SURAT

आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2010-11, is directed against the order passed by the National Faceless Appeal Centre, Delhi, [in short “NFAC/ld. CIT(A)”] dated 10.07.2023, which in turn arises out of an assessment order passed by Assessing Officer u/s 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 31.10.2017.

ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey 3. The Ld Faceless CIT(A) has erred and was not justified on the facts of the case and in law in confirming the issue of notice u/s 148 as proper.” 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual. As per ITS data / AIR information, it was noted by the assessing officer that assessee had deposited cash of Rs.11,11,350/- in his saving bank account, maintained with State Bank of India, Apparel Park Branch, Sachin during the financial year 2009-10 relevant to assessment year (AY) 2010-11. From the ITD systems, it was noticed by assessing officer that assessee had not filed any return of income for AY 2010-11 and on the contrary, the assessee had deposited total cash of Rs.11,11,350/- in his bank account. As such income corresponding to cash deposits of Rs.11,11,350/- has been escaped assessment in the hands of assessee for the year under consideration within the meaning of provision of Section 147 of the Act. In view of the above, assessment for the A.Y. 2010-11 was re-opened, within the meaning of Section 147 of the Act, after recording the reasons for re-opening the case and taking prior approval from the higher authorities. Subsequently, notice u/s 148 of the Act, was issued on 28.03.2017, which was duly served to assessee. Subsequently, notices u/s 142(1) of the Act, dated 28.07.2017, issued upon assessee. In response thereto, assessee has not made any compliance / submission. Therefore, other show-cause notices u/s 142(1) of the Act, dated 06.10.2017 and 10.10.2017, respectively, were issued and served upon the assessee. 4. In response to these notices, the assessee did not file any reply before the assessing officer, Therefore, a letter u/s 133(6) of the Act, was issued to the State Bank of India on 14.08.0217 calling to furnish the bank statement of the account held by the assessee. As per the

ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey bank statements furnished by the said bank, the assessing officer observed that, the assessee is holding two bank accounts viz: account No.30784249542 & account No. 30286682942, in which assessee has deposited total cash of Rs.11,11,350/- and Rs.12,36,050/- respectively on various dates. During assessment proceedings, it was noted by Assessing Officer that assessee has deposited total cash of Rs.11,11,350/- and Rs.12,56,050/- on various dates in his bank accounts. Further from the verification of ITS data/26AS details, it was observed by Assessing Officer that the assessee received an amount of Rs.4,35,134/- and Rs.37,800/- from Rapid Transport Corporation and Vinay Cargo Movies respectively on various dates on which TDS has also been deducted by them (deductors) but the assessee has not offered tax thereon by not filing the return of income for A.Y 2010-11. 5. Since the assessee did not furnish any information and details before the assessing officer, therefore, assessing officer proceeded to make the assessment under section 144 r.w.s. 147 of the Act. Considering the facts and circumstances of the case, the Assessing Officer noted that it is quite clear that the assessee has deposited the cash from his unaccounted income. In fact, it can be said that the assessee has introduced his unaccounted income in the form of so- called cash credits but after its detection, the assessee failed to establish the sources of the so-called cash credits/deposits. In view of the above discussion and facts, an amount of Rs.23,67,400/- deposited / credited in the aforesaid bank accounts was treated as unaccounted and unexplained income of the assessee and therefore assessing

ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey officer made the addition at Rs.23,67,400/- (Rs.11,11,350 + Rs.12,56,050). 6. Further from the verification of ITS data/26AS, it was observed by the Assessing Officer that the assessee received an amount of Rs.4,3 5,134/- and Rs.37,800/- from Rapid Transport Corporation and Vinay Cargo Movies respectively, on various dates, on which TDS has also been deducted by the deductors but the assessee has not offered tax thereon by not filing the return of income for A.Y. 2010- 11.The Assessing Officer noted that during the entire assessment proceedings, the sufficient opportunities of being heard were given to the assessee, from time to time, but on the appointed date, neither assessee attended nor furnished any details and explanation in respect of the aforesaid receipt/income of Rs.4,35,134 and Rs.37,800/- received during the year under consideration. Therefore, the Assessing Office added the amount of Rs.4,72,934/- (4,35,134 + 37,800) u/s 68 of the Act. 7. Aggrieved by the above additions, so made by the assessing officer, the assessee carried the matter in appeal before the NFAC/ld. CIT(A), who has confirmed the addition made by Assessing Officer. The NFAC/Ld.CIT(A) has considered the assessment order and passed order on merit and confirmed the addition made by the Assessing Officer. Aggrieved by the order of NFAC/Ld.CIT(A) the assessee is in appeal before this Tribunal.

ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey return of income. Since, the assessee could not attend the assessment proceedings, therefore, Assessing Officer made two additions, viz; Rs.23,67,400/- and Rs.4,72,934/-, respectively. The Ld. Counsel also pointed out that addition made by the Assessing Officer to the tune of Rs.4,72,934/- has already included in the total amount of Rs.23,67,400/-, hence effective addition is only to the tune of Rs. Rs.23,67,400/-. The Ld. Counsel also pointed out that assessee has already furnished his return of income and declared gross total income for the A.Y. 2010-11 to the tune of Rs.1,37,634/-, which is sufficient for the small assessee, considering the credit entries in the bank account to the tune of Rs.23,67,400/-, which comes to 5.81% in terms of gross profit ratio. The Ld. Counsel also pointed out that entire credit entries in the bank account should not be income of the assessee and only a percentage of these credit entries can be added in the hands of assessee. 9. The Ld. Counsel further submitted that additions so made by the Assessing Officer u/s 68 of the Act, is not sustainable in law. The addition u/s 68 of the Act can be sustained only when the assessee maintains his books of account. Since the assessee does not maintain books of accounts, therefore assessing officer cannot make addition under section 68 of the Act. Since the assessing officer made addition under wrong section, namely section 68, therefore entire addition should be deleted. 10. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer. He pointed out that since the order passed by the Assessing Officer is ex parte,

ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey therefore matter may be remitted back to the file of the assessing officer for verification of facts of the assessee`s case. 11. On merit, Ld. Sr-DR submitted that addition made by Assessing Office may be sustained. 12. I have heard both the sides and gone through the relevant material on record. I note that assessee submitted before me the following documents and evidences:

(i) Bank statement from 01.04.2009 to 31.03.2010 (pages 1- 5 of the paper book); (ii) Bank statement of from 01.03.2009 to 31.03.2010 (pages 6-13 of paper book); (iii) Copy of 26AS for A.Y. 10-11 (pages 14-15 of paper book); (iv) Copy of ITR-4, computation of total income and balance sheet for A.Y 10-11(vide pages 16-18 of paper book) and (v) Certificate from some of the transporters regarding transportation work (vide pages 19-21 of paper book). 13. I have gone through the above bank statements submitted by the assessee and noted that entire credit entries in the above bank statements, to the tune of Rs.23,67,400/-, cannot be income of the assessee. I also find that amount to the tune of Rs.4,72,934/- has already been included in the total amount of Rs.23,67,400/-, hence effective addition is only to the tune of Rs.23,67,400/-. I note that assessee has already filed his return of income and declared the gross total income at Rs.1,37,630/-. Since, assessee is a very small assessee and if @ 5% of the cash credit entries in the bank account to the tune

ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey of Rs.23,67,400/- is considered than it comes to Rs.1,18,370/-, however, I noticed that the assessee declared his income in his return of income to the tune of Rs.1,37,634/- which is more than @ 5% of the credit entries in his books of account. Thus, according to me, no further addition should be made in the hands of the assessee as the assessee has already declared 5% of the credit entries in his bank accounts. I find that this issue of the assessee, is squarely covered by the judgment of the Co-ordinate Bench of ITAT, Surat in the case of Mukesh K. Lakahni v. ITO in ITA No.20/SRT/2023, for A.Y. 2010- 11 dated 04.09.2023 wherein it was held as follows: “11. I note that the total credit in the bank statement, after eliminating contra-entries, comes to Rs.23,24,831/-. Therefore, I am of the view that to meet the end of justice an addition at the rate of 5% on total credit in the bank statement of Rs.23,24,831/- may be a reasonable addition in the hands of the assessee. For this, I rely on the judgment of Co-ordinate Bench of ITAT, Surat in the case of Smt. Krushangi Keyur Bhagat vs ITO, in ITA No.2706/Ahd/2015 for AY.2008-09, order dated 26.09.2018, wherein the Tribunal sustained the addition at the rate of 5% of total deposits. The findings of the Co-ordinate Bench of ITAT, are reproduced below: “7. We have heard the rival submissions and perused the relevant material on record. We find that the assessee is a salaried person and deriving salary from Kalyani Multilink Pvt. Ltd. The deposits appearing in the bank account under consideration has not been disclosed. However, the pattern of deposits in bank account would show that these are there are some transaction in which cheque has been issued. There are debit entries in this bank account. The assessee has claimed that this bank account pertained to her business in trading. Ongoing through bank statement and facts of the case we observe that there are frequent transaction of cash as well as cheques. On careful consideration of facts, we are of the view that entire deposits in bank account cannot be considered for addition. Since the bank account is reflecting deposits as well as withdrawals, hence, there is every likely that bank account has been used for unrecorded business transactions as claimed by the assessee. Therefore, it would be in the interest of justice that only profit eliminate @ 5% is considered for tax of total deposits of Rs. 18,32,079. Therefore, the assessing officer is directed to consider net profit @ 5% of total deposits of Rs.18,32,079 which worked out to Rs. 91,600. Accordingly this addition of Rs.14,76,614 is restricted to Rs. 91,600. This ground is therefore, partly allowed.”

ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey 12.Based on these facts and circumstances, as narrated above, I direct the Assessing Officer to make the addition in the hands of the assessee to the tune of Rs.1,16,242/- (5% of Rs.23,24,831/-). Hence the assessee’s appeal is allowed partly.” 14. Respectfully following the above binding precedent, I delete the addition.

Order is pronounced on 29/12/2023 in the open court.

Sd/- (Dr. A.L. SAINI) ACCOUNTANT MEMBER सूरत / Surat �दनांक/ Date: 29/12/2023 Dkp Outsourcing Sr.P.S. Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat